CAIRO, Dec 26 President Mohamed Mursi admitted
on Wednesday that Egypt's economy faces serious problems after
he enacted a new, bitterly contested constitution that is
supposed to help end political unrest and allow him to focus on
the financial crisis.

The president said the economy also had great opportunities
to grow, but earlier the Egyptian pound tumbled to its weakest
level in almost eight years as ever more people rushed to buy
dollars and withdraw their savings from banks.

Mursi, catapulted into power by his Islamist allies this
year, believes that adopting the constitution quickly and
holding elections to a permanent new parliament soon will help
to end the long period of turmoil that has wrecked the economy.

The presidency announced on Wednesday that Mursi had
formally approved the constitution, which was drafted by his
Islamist allies, the previous evening, shortly after results
showed that Egyptians had backed it in a referendum.

Keen to be seen as tough but fair, Mursi said it was time
for all political forces to put aside their differences and
start working together to bring economic stability.

"I will make all efforts, together with you, to push forward
the economy which faces huge challenges and has great
opportunities to grow," Mursi said in his first address to the
nation since the adoption of the constitution.

The text won about 64 percent in a two-stage referendum,
paving the way for a new parliamentary vote in about two months.

The main opposition group, which has until now boycotted all
rounds of national unity talks led by Mursi's office, said it
had not changed its position.

"The ongoing talks are farcical and theatrical," Hussein
Abdel Ghani, an opposition spokesman, told reporters. He called
on Egyptians to demonstrate against the new constitution on Jan.
25, the second anniversary of Egypt's revolution.

He added that the opposition would stick to its policy of
peaceful protest against Mursi's government, which he said
sought to use religion as a tool to create an oppressive state.

ANOTHER ISLAMIST VICTORY

The referendum result marked yet another electoral victory
for the Islamists since veteran autocrat Hosni Mubarak was
toppled in 2011, following parliamentary elections last year and
the presidential vote that brought Mursi to power this year.

The charter states that the principles of sharia, Islamic
law, are the main source of legislation and that Islamic
authorities will be consulted on sharia - a source of concern to
the Christian minority and others.

Mursi's government, which has accused opponents of damaging
the economy by prolonging the political upheaval, now faces the
tough task of building a broad consensus as it prepares to
impose hugely unpopular austerity measures.

In his speech, Mursi said he would introduce incentives to
make Egypt - once a darling of emerging market investors - an
attractive place for business once again, and he would consider
making changes in the cabinet as part of his plan.

He also appeared keen to seem tolerant of those who voted
"no" in this month's referendum.

"This is their right," he said. "Those who said 'no' and
those who said 'yes', I thank you both because we do not want to
return to the era of one opinion or fake majorities."

CRISIS ATMOSPHERE

The atmosphere of crisis deepened this week after the
Standard & Poor's agency downgraded Egypt's long-term credit
rating and warned of a possible further cut. The government has
imposed currency restrictions to reduce capital flight.

In Cairo's bustling centre, people appeared nervous, openly
expressing their frustration with economic instability as they
went about their daily business.

"The country's going to the pits. Everything is a mess,"
Hamdy Hussein, a 61-year-old building janitor, said angrily.
"It's worse than ever. Mubarak was better than now. People were
living and there was security."

Ashraf Mohamed Kamal, 30, added: "The economic situation
will be a mess in the next few years. It already is. People will
get hungrier. People are now begging more."

The pound traded as low as 6.1775 against the dollar on
Wednesday, close to its all-time low of 6.26 hit on Oct. 14,
2004, on concerns that the government might devalue or tighten
restrictions on currency movements.

"All customers are rushing to buy dollars after the
downgrading," said a dealer at a Cairo-based bank. "We'll have
to wait to see how the market will operate with the U.S. dollar,
because as you know there is a rush at the moment."

The government is now in talks with business figures, trade
unions and other groups to persuade them of the need for tax
increases to resolve the crisis. Mursi has committed to such
austerity measures to receive a $4.8 billion loan from the
International Monetary Fund.

However, Al-Mal newspaper quoted Planning Minister Ashraf
al-Araby as saying the government would not implement the tax
increases until it had completed the dialogue with different
parts of society.

Mursi's government argues the constitution offers enough
protection to all groups, and that many Egyptians are fed up
with street protests that have prevented a return to normality.

The charter gives Egypt's upper house of parliament, which
is dominated by Islamists, full legislative powers until the
vote for a new lower house is held.

Mursi is also due to address the upper house on Saturday in
a speech likely to be dominated by economic policy.

Sharpening people's concerns, the authorities imposed
currency controls on Tuesday to prevent capital flight. Leaving
or entering Egypt with more than $10,000 in cash is now banned.

Adding to the government's long list of worries,
Communications Minister Hany Mahmoud has resigned citing his
"inability to adapt to the government's working culture".

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